The Real Estate Sentiment Index for the April-June 2015 period declined to 49 from 51 in the previous quarter and a peak of 63 in the July-September 2014 period.Ravi Teja Sharma | ET Bureau | July 31, 2015, 15:33 IST

DLF says giving over 85% of the money, or Rs 50 crore, as advance for a Rs 58-crore transaction is a "normal commercial practice".NEW DELHI: The sentiment among various stakeholders in the Indian real estate industry has moved into the negative zone for the first time since the Lok Sabha elections in mid-2014, according to a report by industry body FICCI and property advisory firm Knight Frank India.

The Real Estate Sentiment Index for the April-June 2015 period declined to 49 from 51 in the previous quarter and a peak of 63 in the July-September 2014 period.

The future sentiment index, however, stood at 62 for the April-June 2015 period, indicating that the coming six months are likely to be better.

“Despite delayed reforms in the economy and concerns across the globe, the Indian economy is doing reasonably well with basic fundamentals showing a strong foothold. However, notwithstanding the economic scenario, the current sentiment score, at 49, has reached the pre-election level and reflects a negative sentiment. Stakeholders (developers, financial institutions and other supply side stakeholders) believe that the current market scenario is worse compared to six months ago,” said Samantak Das, chief economist and national director-research at Knight Frank India.

He pointed out that delayed reforms seem to have affected the sentiments. “Another factor that has had a negative impact on the current score is the underperformance of the residential market. Majority of the respondents are of the view that the residential launches, sales and price appreciation are at a much lower level than six months ago. While the current sentiment is negative, the future sentiment score stands at 62. Though the score indicates that the coming six months are likely to be better, the continuous four-quarter fall reflects the waning stakeholder confidence,” he said.

The sentiment about the residential real estate sector has seen a constant decline with a majority of the stakeholders believing that prices are likely to remain stagnant in the next six months and one-third of them foreseeing a price correction in this period. Home sales have seen a consistent decline over the last ten quarters and survey respondents expect new launches and sales to drop even further by the end of 2015.

On the commercial office space market, however, stakeholder sentiments continued to remain relatively strong. Respondents see demand for office space strengthening further in the coming six months and a majority of them expect rentals to firm up by December 2015.